1BUSINESS ENTREPRENEUR Table of Contents Introduction......................................................................................................................................2 About the company......................................................................................................................2 Resource and long term capability of UBER..................................................................................3 Understanding the competitive advantage of UBER.......................................................................4 Advantages and disadvantages........................................................................................................6 Conclusion.......................................................................................................................................7 Reference list...................................................................................................................................8
2BUSINESS ENTREPRENEUR Introduction When an organisation is set up with a profitability motive it can be called as a business organisation. The owner of the business sets up a business organisation based on the values, principles and ethics which drives the foundation of the operations. A business organisation functions in two types of environment internal and external (Fisher 2012). It is important for the management of the company to ensure that the terms and conditions of both these environments are aligned in order to get the desired results. The elements in the internal environment are under the control of the managementas these factorsare the resource and capabilitiesof the organisation (Brandenburger and Nalebuff 2009). On the other hand elements like the political condition of the country where the company operates, the economic development opportunities of the country, the social acceptance of the service or product etc are some of the external factors that impact the business from outside. In this assignment the sustainability of UBER is being discussed. The competition of the company as well as the sustainability of the competitive advantage of UBER will be analyzed and discussed. About the company UBER has changed the face of the taxi industry with the innovative approach that the company has developed.The use of technology aligned with the business operations have enebaled the organisation to reach out to the market.Travis Kalanick and Garrett Camp established the company on 2009; they developed the mobile application which would enable the user to book a cab by using the application(Cramer and Krueger2016). The organisation operates in a number of countries and has become one of the most successful startups. Over the years of operation and innovation the company has been through ups and downs in 2017, the company has faced a loss of $4.5 billion USD yet has managed to grow the revenue numbers
3BUSINESS ENTREPRENEUR form the last financial year.The revenue of the organisation is $37 billion, a jump of 85% compared with 2016 (latimes.com 2018). The company has operations in over 350 cities in 68 countries (Cramer and Kruege 2016). Resource and long term capability of UBER With the help of the VRIO analysis the resources can be categorized in the form of their role in the competitive advantage that these resources help the company gain. Resources can be divided in two sections tangible and intangible (Barney 1991). ResourcesValuableRareImitableOrganizedImpacton competitive advantage Tangible Revenues and profitsYesNoNoYesTCA Notesandaccounts receivable YesNoNoYesTCA SecuritiesYesNoNoNoCE InventoriesYesYesNoYesUCA Employeesandthe drivers who are listed with the company YesYesYesYesSCA Thesuppliersofthe taxi YesYesNoYesUCA
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4BUSINESS ENTREPRENEUR Buildingsand infrastructure YesNoNoNoCE Toolsfurnitureand fixtures YesNoNoNoCE LandYesNoNoNoCE Construction in processYesNoNoNoCE Intangible Strategic relationYesYesYesYesSCA UBER applicationYesYesYesYesSCA The company is driven by innovation and the idea of developing a taxi booking application was ground breaking when the company had launched. The business model of UBER can be said to be based on this mobile application and thus the company has the capability to produce a strong return on equity in the long run (Barney 1991). UBER has the resource and capability to maintain the competitive advantage over the others platforms in the market which offer similar service. The taxis that are listed with UBER have to maintain their regulations and ensure safety of the passengers.The above framework showcases the capability of the company and as the company has the resource to innovate and to maintain the security of the customers the company will have a long term return on equity (Barney 1991).
5BUSINESS ENTREPRENEUR Understanding the competitive advantage of UBER With the help of the five forces framework developed by Michel Porter the intensity of competition can be described. Threat of new entrants:in case of the business idea and the model that is used by the company, it is fairly easy to develop an application to support the process. The challenging part of the business is the logistics and the goodwill that the company has developed over the years. Hence the threat can be said to be low. Intensity of competition:Because the company works in the international level there are a number of competitors who have come up with the model of app based taxi service. The direct competitors are: Didi Chuxing, China; Ola, India; Lyft, U.S; Grab, Singapore and GoJek, Indonesia. However, these organisations are popular in their own countries of operation where as UBER has operations world-wide (Cramer and Krueger 2016). Threat of substitute:there are a number of substitute to the services of UBER, public transport, personal transport, local taxi service etc are major threat to the organisation not only in terms of the facility but also in terms of the price they have to pay for the service. On the other hand this substitute also does not have the complexity of using the application as well. Therefore it can be said that the threat is high in this case (Porter 2008). Bargaining power of the customers:depending on the area of operation the bargaining power of the customers depends, as the intensity of competition in terms of substitute is also high it can be said that the bargaining power of the customers are high. The switching cost for the customers to gain the service form another option is low.
6BUSINESS ENTREPRENEUR Bargaining power of the suppliers:The suppliers of the company are the people who are providing their taxis and are being associated with the company to provide the service. The bargaining power of the suppliers are low as UBER is the pioneer of this kind of an exposure for the suppliers which has provided a significant trust and goodwill in the industry as well as among the customers (Porter 2008). Blue ocean strategy of UBER With the launch of the application and the taxi service UBER has made a new market place for the company where there was no direct competition during the time of inception. This is the major reason for the company to achieve acceptance in the industry as well as the customers. The company targeted the issues of the people in hiring taxi services, with the application. The platform allowed the people to book a cab and then ensures that there is no third party involved in between (Chan and Mauborgne 2005). The UBER application is the core competency of the company. A Smartphone user with the help of internet connectivity can download the application. Here the strategic relation the company hasdeveloped with Google Mapshelpsin providingthe services.The mobile application (integrated with Google maps) that enables the passenger to connect with the nearest Uber-registered driver. This is at that time an innovation that was disruptive in nature, disruptive innovation is the kind of innovation that allows a company to make a new market place within the industry making it exclusive of any other players in the market(Chan and Mauborgne 2005). Advantages and disadvantages The advantages of the business are that as a pioneer in the business, the company has gathered a reputation and trust among the customers (Cramer and Krueger 2016).
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7BUSINESS ENTREPRENEUR The company has addressed some of the major issues in the industry like price, rejection, unavailability of convenience etc. The innovation culture in the company is another major advantage as the company has a number of innovative features that they come up with each upgrade. The feature of outstation booking, cancellation, being able to talk to the driver and track the vehicle live etc are some of the innovative features that UBER has pioneered (Cramer and Krueger 2016). The promotion of the company focuses on safety and care that the drivers ensure while carrying the passengers. This has also worked as an advantage for the company (Cramer and Krueger 2016). The disadvantage of the system is that the company loses out on a large target market that is unable to use technology. As a technology based company which has a number of non- technical substitutes makes is a major disadvantage. The company has been through a number of controversies and this has taken a hit on the goodwill. Conclusion From the above discussion it can be concluded that UBER has achieved success on the basis of the disruptive innovation that the entrepreneurs had brought about in the taxi industry. The blue ocean strategy is achieved by the company on the basis of this disruptive innovation. By challenging the basic issues that the passengers face with heir services UBER has set up returns on long term. The sustainable growth of the company is attributed towards the strategic
8BUSINESS ENTREPRENEUR relations of the company, the employees and the drivers who are listed with the company and most importantly the technology and innovation that are developed.